Exhibit 99.1
The Bon-Ton Stores, Inc. Announces
First Quarter Fiscal 2007 Results
Net Loss reported of $1.78 Per Diluted Share
Company reaffirms guidance range for fiscal 2007
YORK, Pa.--(BUSINESS WIRE)--May 24, 2007--The Bon-Ton Stores, Inc.
(NASDAQ: BONT) today reported results for the first quarter of fiscal
2007 ended May 5, 2007.
For the first quarter of fiscal 2007, the Company reported a net
loss of $29.3 million, or $1.78 per diluted share, compared to a net
loss of $10.8 million, or $0.66 per diluted share, for the first
quarter of fiscal 2006.
Bud Bergren, President and Chief Executive Officer, commented,
"Our first quarter 2007 results included the first five weeks of
Carson's operations compared to the first quarter 2006 results which
did not include this five-week period. This is historically a
clearance-driven period with low margins. We were comfortable with our
performance in the first two months of the quarter and then the
coldest April in ten years hit, which had a substantial adverse impact
on our sales results and put pressure on our margin dollars. We are
encouraged by the strong performance in several key merchandise
categories in the first quarter including better sportswear,
children's, intimate apparel and shoes, and by the overall sales
trends that improved once the weather became more seasonal. Customers
have been responding positively to our assortments. We will continue
to manage our inventories and control expenses to plan."
Mr. Bergren continued, "I would like to reiterate what we said a
year ago - the integration of the Carson's and Bon-Ton is a two-year
process; we will not have a 'normalized' year until 2008. We are still
on track with the integration process. We believe we have the right
initiatives in place and remain intently focused on driving sales and
profit for our Company."
Sales
For the first quarter of fiscal 2007, total sales increased 31.3%
to $737.6 million compared to $561.8 million for the same period last
year. The first quarter of fiscal 2007 sales include Carson's stores
sales of $476.9 million for the period ended May 5, 2007. For the
first quarter, Bon-Ton comparable store sales decreased 2.5% and
Carson's comparable store sales decreased 0.8%.
Other Income
Other income increased $7.8 million to $22.6 million in the first
quarter of fiscal 2007, compared to $14.8 million in the prior year
period, primarily due to the inclusion of thirteen weeks of Carson's
operations as compared to eight weeks of Carson's operations in the
prior year period and the program revenue received under the Credit
Card Program Agreement with HSBC Bank Nevada, N.A.
Gross Margin
In the first quarter of fiscal 2007, gross margin dollars
increased $36.7 million compared to the prior year period. The
increase in gross margin dollars is primarily attributable to the
inclusion of thirteen weeks of Carson's operations as compared to
eight weeks of Carson's operations in the prior year period. The gross
margin rate decreased 3.9 percentage points, to 33.5% of net sales, as
compared to 37.4% reported in the prior year period. The decrease in
the gross margin rate primarily reflects the negative margin impact of
the sales for the first five weeks in the quarter in the Carson's
stores which were not included in the first quarter results of fiscal
2006.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses in the first
quarter of fiscal 2007 increased $60.4 million to $260.1 million as
compared to the prior year period. The increase in SG&A dollars is
primarily attributable to the inclusion of thirteen weeks of Carson's
operations as compared to eight weeks of Carson's operations in the
prior year period. The SG&A expense rate decreased 0.3 percentage
point to 35.3% of net sales, compared to 35.6% of net sales in the
prior year period. Integration expenses in the first quarter of fiscal
2007 approximated $0.8 million.
EBITDA
EBITDA, defined as net income (loss) before interest, income
taxes, depreciation and amortization, decreased $15.8 million in the
first quarter of fiscal 2007 to $9.4 million compared to $25.2 million
in the first quarter of fiscal 2006. EBITDA is not a measure
recognized under generally accepted accounting principles - see Note 1
below.
Depreciation and Amortization and Amortization of Lease-related
Interests
Depreciation and amortization expense, including amortization of
lease-related interests, in the first quarter of fiscal 2007 increased
$9.0 million to $28.2 million compared to $19.2 million in the prior
year period. The increase in deprecation and amortization dollars is
primarily attributable to the inclusion of thirteen weeks of Carson's
operations as compared to eight weeks of Carson's operations in the
prior year period.
Interest Expense, Net
Interest expense, net, in the first quarter of fiscal 2007
increased $3.6 million to $27.5 million compared to $23.9 million in
the prior year period. The increase in interest expense dollars is due
to the debt incurred in connection with the acquisition of Carson's.
In the first quarter of fiscal 2006, the Company recorded a charge of
$6.8 million reflecting the write-off of fees associated with a bridge
facility and the early payoff of the Company's previous debt.
Comments
Keith Plowman, Executive Vice President and Chief Financial
Officer, commented, "We were not satisfied with our fiscal 2007 first
quarter financial results. We planned for the fiscal 2007 first
quarter loss to exceed last year due to the inclusion of Carson's
operations for the first five weeks of the year, which is a
historically low margin period, while this same five weeks of Carson's
operations was not included in the fiscal 2006 first quarter results.
During the last month of the quarter, the unseasonably cold weather
and the resultant lower April sales volume pushed our margin dollars
below our expectations. With the return of more seasonable weather
during the month of May, we have seen an improvement in our sales
performance and we believe our fiscal 2007 performance will be in the
lower end of the range of the guidance provided previously for fiscal
2007, with the earnings per share range of $3.40 to $3.50 and the
EBITDA range of $315 to $320 million."
The Company's quarterly conference call to discuss first quarter
fiscal 2007 results will be broadcast live today at 10:00 a.m. Eastern
time. To access the call, please visit the investor relations section
of the Company's website at www.bonton.com/investor/home.asp. An
online archive of the broadcast will be available within two hours
after the conclusion of the call. You may also participate by calling
(800)289-0572 at 9:55 a.m. Eastern time. A taped replay of the
conference call will be available within two hours of the conclusion
of the call and will remain available through Tuesday, June 5, 2007.
The number to call for the taped replay is (888) 203-1112 and the
conference PIN is 7728456.
The Bon-Ton Stores, Inc. operates 277 department stores, which
includes eight furniture galleries, in 23 states in the Northeast,
Midwest and upper Great Plains under the Bon-Ton, Bergner's, Boston
Store, Carson Pirie Scott, Elder-Beerman, Herberger's and Younkers
nameplates and, under the Parisian nameplate, two stores in the
Detroit, Michigan area. The stores offer a broad assortment of
brand-name fashion apparel and accessories for women, men and
children, as well as cosmetics and home furnishings. For further
information, please visit the investor relations section of the
Company's website at www.bonton.com/investor/home.asp.
Statements made in this press release, other than statements of
historical information, are forward-looking and are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Such statements involve risks and uncertainties that may
cause results to differ materially from those set forth in these
statements. Factors that could cause such differences include, but are
not limited to, risks related to retail businesses generally,
additional competition from existing and new competitors, weather
conditions that could negatively impact sales, uncertainties
associated with opening new stores or expanding or remodeling existing
stores, risks related to the Company's integration of the business and
operations comprising the acquired Carson's and Parisian stores, the
ability to attract and retain qualified management, the dependence
upon key vendor relationships and the ability to obtain financing for
working capital, capital expenditures and general corporate purposes.
Additional factors that could cause the Company's actual results to
differ from those contained in these forward-looking statements are
discussed in greater detail under Item 1 A of the Company's Form 10-K
filed with the Securities and Exchange Commission.
Note 1: As used in this release, EBITDA is defined as net income
(loss) before interest, income taxes, depreciation and amortization
and amortization of lease-related interests. EBITDA is not a measure
of financial performance under generally accepted accounting
principles ("GAAP"). However, we present EBITDA in this release
because we consider it to be an important supplemental measure of our
performance and believe that it is frequently used by securities
analysts, investors and other interested parties to evaluate the
performance of companies in our industry and by some investors to
determine a company's ability to service or incur debt. In addition,
our management uses EBITDA internally to compare the profitability of
our stores. EBITDA is not calculated in the same manner by all
companies and accordingly is not necessarily comparable to similarly
entitled measures of other companies and may not be an appropriate
measure for performance relative to other companies. EBITDA should not
be assessed in isolation from or construed as a substitute for net
income or cash flows from operations, which are prepared in accordance
with GAAP. EBITDA is not intended to represent, and should not be
considered to be a more meaningful measure than, or an alternative to,
measures of operating performance as determined in accordance with
GAAP. A reconciliation of net income to EBITDA is provided in the
financial schedules accompanying this release.
THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data) May 5, February 3,
(Unaudited) 2007 2007
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Assets
Current assets:
Cash and cash equivalents $24,391 $24,733
Merchandise inventories 824,571 787,487
Prepaid expenses and other current assets 93,075 84,731
Deferred income taxes 17,858 17,858
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Total current assets 959,895 914,809
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Property, fixtures and equipment at cost, net
of accumulated depreciation and amortization
of $334,284 and $311,160 at May 5, 2007 and
February 3, 2007, respectively 880,381 897,886
Deferred income taxes 76,873 76,586
Goodwill 27,824 27,377
Intangible assets, net of accumulated
amortization of $14,487 and $12,087 at May 5,
2007 and February 3, 2007, respectively 174,300 176,700
Other long-term assets 40,132 41,441
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Total assets $2,159,405 $2,134,799
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $229,882 $209,742
Accrued payroll and benefits 47,781 68,434
Accrued expenses 141,215 178,642
Current maturities of long-term debt 5,368 5,555
Current maturities of obligations under
capital leases 1,948 1,936
Income taxes payable 13,471 48,086
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Total current liabilities 439,665 512,395
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Long-term debt, less current maturities 1,246,953 1,120,169
Obligations under capital leases, less current
maturities 68,955 69,456
Other long-term liabilities 85,754 86,383
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Total liabilities 1,841,327 1,788,403
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Shareholders' equity:
Preferred Stock - authorized 5,000,000 shares
at $0.01 par value; no shares issued - -
Common Stock - authorized 40,000,000 shares at
$0.01 par value; issued shares of 14,520,434
and 14,469,196 at May 5, 2007 and February 3,
2007, respectively 145 145
Class A Common Stock - authorized 20,000,000
shares at $0.01 par value; issued and
outstanding shares of 2,951,490 at May 5,
2007 and February 3, 2007 30 30
Treasury stock, at cost - 337,800 shares at
May 5, 2007 and February 3, 2007 (1,387) (1,387)
Additional paid-in-capital 133,104 130,875
Accumulated other comprehensive income 798 1,189
Retained earnings 185,388 215,544
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Total shareholders' equity 318,078 346,396
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Total liabilities and shareholders' equity $2,159,405 $2,134,799
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THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THIRTEEN
WEEKS ENDED
-----------------------
(In thousands except share and per share data) May 5, April 29,
(Unaudited) 2007 2006
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Net sales $737,561 $561,774
Other income 22,646 14,813
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760,207 576,587
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Costs and expenses:
Costs of merchandise sold 490,672 351,580
Selling, general and administrative 260,132 199,780
Depreciation and amortization 26,960 18,514
Amortization of lease-related interests 1,229 702
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(Loss) income from operations (18,786) 6,011
Interest expense, net 27,469 23,868
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Loss before income taxes (46,255) (17,857)
Income taxes (16,956) (7,022)
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Net loss $(29,299) $(10,835)
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Per share amounts -
Basic:
Net loss $(1.78) $(0.66)
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Basic weighted average shares outstanding 16,481,756 16,389,962
Diluted:
Net loss $(1.78) $(0.66)
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Diluted weighted average shares outstanding 16,481,756 16,389,962
Other financial data:
EBITDA (1) $9,403 $25,227
(1) EBITDA Reconciliation
The following table reconciles net income to EBITDA for the
periods indicated:
THIRTEEN
WEEKS ENDED
-------------------
(In thousands) May 5, April 29,
(Unaudited) 2007 2006
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Net loss $(29,299) $(10,835)
Adjustments:
Income taxes (16,956) (7,022)
Interest expense, net 27,469 23,868
Depreciation and amortization 26,960 18,514
Amortization of lease-related interests 1,229 702
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EBITDA $9,403 $25,227
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CONTACT: The Bon-Ton Stores, Inc.
Mary Kerr, 717-751-3071
Vice President
Public and Investor Relations
mkerr@bonton.com